U.S. Drilling Expenditures Shatter Previous Record

WASHINGTON, DC, Jan. 5 — US oil and gas drilling expenditures soared to a record $226.4 billion in 2007, more than doubling the previous record of $109.8 billion a year earlier, the American Petroleum Institute said on Jan. 5.

API said the Joint Association Survey of Drilling Costs for 2007, the latest year for which figures are available, showed that records also were set in average costs per well and per foot.

Average costs per US oil well grew 82% to $4 million in 2007 from $2.2 million, while per foot costs climbed 78% year-to-year to an average of $717 from $412, according to API. It said that average costs per domestic natural gas well rose 105% to $3.9 million in 2007 from $1.9 million in 2006 as average costs per foot grew 74% year-to-year to $604 from $348.

I guess for those who would argue that they aren’t spending enough, how much should they spend? Part of this was due to much higher costs for drilling rigs – driven by high demand, but companies also drilling more wells:

“But despite a doubling of the cost to drill and develop wells, we also witnessed a rise in both the number of wells drilled, which increased 4% from 2006, and the average depth of those wells, which increased 9%,” he continued.

I think it’s a safe bet, though, that drilling outlays will fall substantially in 2008.